ALEX MILLS: Tax changes could raise gas prices

As President Barack Obama and Republicans and Democrats in Congress negotiate the nation's financial issues, it is very clear that Obama stands firmly on his belief that the oil and gas industry should pay more taxes.

In meeting after meeting during the week of July 18, officials within the Obama administration stated that it wants a tax increase and it wants to begin with oil and gas.

"You guys are on the table," one former congressman told a group of oil and gas association executives in a conference call.

"Oil and gas is in the administration cross hairs," another said.

Their comments meant that increasing taxes on the oil and gas industry is a top priority of the administration.

The associations immediately fired off a statement to members of Congress, asking them to reject the president's tax proposal. Elimination of current tax provisions vital to domestic independent oil and gas producers would severely hurt independents' abilities to raise the capital necessary to drill new wells in the United States.

"President Obama has proposed raising $43 billion over a 10-year period by eliminating tax provisions which almost exclusively apply to domestic producers," the statement said. "These include such items as intangible drilling costs and percentage depletion.

"Independent producers drill 95 percent of the new oil and gas wells in the United States each year. The tax provisions targeted by the Obama administration are only available on wells drilled domestically."

The Obama tax increase proposal is bad tax policy. It is bad energy policy. It is bad fiscal policy.

Today is the wrong time to be raising taxes on anyone. Washington should be encouraging economic development.

Increasing taxes on independent oil companies will discourage drilling in the U.S. and production of oil and natural gas. As supplies become short, prices for energy will increase, which would be another bad economic development as the nation tries to come out of the recession.

Increasing oil and gas production puts downward pressure on energy prices, and as energy prices weaken, the cost of doing business declines.

As businesses reduce their energy costs, profitability increases and jobs are created.

Since taking office two years ago, Obama has proposed tax and environmental laws and regulations "to end the tyranny of oil in our time," as he said in March 2009.

He even sent Treasury Secretary Timothy Geithner to Capitol Hill to defend his proposed tax changes pertaining to oil and gas.

"We don't believe it makes sense to significantly subsidize the production and use of sources of energy that are dramatically going to add to our climate change imperative," Geithner said. "We don't think that's good economic policy, and we think changing those incentives is good for the country."

Geithner's statement reveals the true philosophy of the Obama administration: If it moves, tax it. If it keeps moving, regulate it. If it stops moving, subsidize it.

Alex Mills is president of the Texas Alliance of Energy Producers. For more information, see www.texasalliance.org.